Premier Liberation multi-asset risk-targeted solutions

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1 multi-asset risk-targeted solutions Fund update - fourth quarter 2014 For professional adviser use only and not for distribution to retail investors

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3 multi-asset risk-targeted solutions Need to know To help advisers assess suitability for clients, our risk-targeted Funds are managed to be aligned with Distribution Technology (DT) risk profiles 4 to 8, based on asset allocations and volatility boundaries that are updated quarterly. The Funds benefit from the best ideas of the multi-asset team through their fund and investment selection strategies, using a blend of long-term core positions and short-term opportunities that incorporate different assets and spread risk for effective risk management. The performance information for the multi-asset risk-targeted solutions in this document are based on the C share class, which has the lowest charging structure of the share classes available. To help with comparisons between the thousands of funds, UK authorised funds are categorised into different groups (known as sectors) by the UK investment management trade association, known as the Investment Association (IA). The IA sector will include funds with different share classes and different charges and is provided for illustrative purposes only. Performance returns will vary between share classes due to the different charges. Contents 4. Volatility summary 5. Performance summary 6. Global sector performance 7. Activity - target asset allocation Performance drivers - asset allocation 8. No. IV 9. No. V 10. No. VI 11. No. VII 12. No. VIII The complete portfolio 13. No. IV 14. No. V 15. No. VI 16. No. VII 17. No. VIII 18.Glossary of terms 19. Contact us 20. Important information 3

4 Volatility summary Since start of risk-targeting to (The Multi-Asset team started risk-targeting the Funds on 01 December 2012) The funds are designed to achieve attractive total returns, but crucially they are tasked with doing so while staying in pre-defined volatility bands. That way, advisers and their investors can have a reasonable idea of what level of risk is being taken in order to achieve those returns. Annulaised volatility (%) No. IV No. V No. VI No. VII No. VIII As the managers of these funds, we are well aware of the importance of keeping the funds within the set volatility bands. We are therefore pleased to report we have been successful in that task, as the chart opposite illustrates. No. IV has incurred the lowest volatility over its life, while No. VIII has incurred the most. This is down to the asset allocations that are set by Distribution Technology, so, for example, No. IV has no direct exposure to emerging market equities, while in No. VIII they make up 28% of the portfolio. Source: FE Analytics, total return, annualised ratios, UK sterling basis, based on C Accumulation shares. Past performance is not an indication of future returns. 4

5 Performance summary Quarter ending Since start of risk-targeting to (The Multi-Asset team started risk-targeting the Funds on 01 December 2012) Total return (%) Total return (%) No. IV No. V No. VI No. VII No. VIII 20 No. IV No. V No. VI No. VII No. VIII While the volatility profiles are as we d expect them to be, the total return profiles are not quite as neat and tidy. This is partly because the funds have only been running for a short time, perhaps not allowing the usual long-term relationships between risk and return to assert themselves. There is also a sense that current market conditions are unusual in so far as lower risk assets have been leading markets higher, whereas the opposite is usually true. The last quarter has thrown up a good example of this, as did 2014 as a whole. Among the best assets to have held were UK Gilts, which are considered to be the safest assets you can buy, while UK equities made paltry returns in comparison. The same is true in the world of equities, where US equities, which are considered to be at the safer end of the spectrum, made exceptional returns, while areas such as emerging markets or Europe struggled to progress. 5 Source: FE Analytics, total return, annualised ratios, UK sterling basis, based on C Accumulation shares. funds 5 year performance: No. IV 41.5%, No. V 49.0%, No. VI 54.2%, No. VII 41.3%, No. VIII 41.4%. Past performance is not an indication of future returns.

6 Global sector performance IA sectors - total return for quarter ending Global Emerging Markets -0.6% Europe ex-uk 1.2% Japan 0.9% Money Market 0.02% Sterling Corporate Bond 3.4% Asia ex-japan 2.7% UK Equity Income 2.1% UK All Companies 1.7% UK Gilts 6.8% Property 6.5% -2% 0% 2% 4% 6% 8% 10% North America 8.8% The big talking point for financial markets was the pronounced slump in the price of oil. This had knock-on effects on several other markets and assets, most notably the currencies of oil producers such as Russia. It was a volatile quarter for equity markets, containing two sharp selloffs that were followed by equally dramatic rebounds. Global equities ended the quarter with positive returns though, driven largely by runaway performance from the US. UK equities produced a flat return, mimicking their performance over the year as a whole, while European equities lost ground. Emerging markets were a mixed bag, with energy exposure hurting markets like Latin America and Eastern Europe, but bolstering some in Asia. Confusion over the potential impacts of the lower cost of oil is causing concern over deflation, particularly in the Eurozone. This concern drove developed-market sovereign bond prices higher, as they are seen as one of the few assets that can perform well against a deflationary backdrop. Equities Bonds Property Source: FE Analytics, bid to bid, total return, UK sterling basis. Past performance is not an indication of future returns. 6

18 Glossary of terms Alternative Assets Non traditional investments which could include hedge funds and commodities for example and which are designed to help diversify a portfolio as they tend not to move in the same direction as the stockmarket. Autocall An autocall structured product has the potential to mature before the end of the product s life, if certain predetermined market conditions are reached. The investor will usually receive a pre-defined return. Bonds These are like loans to governments/companies in return for a fixed rate of interest. Capital Growth The increase in value of your original investment. Caps Refers to a company s market capitalisation, normally small, mid and large. Equities Another name for company shares. Fixed Income/Interest Another term used for corporate and government bonds. Floating Rate Debt These are bonds which do not have a fixed rate of interest. Gilts A bond issued by the UK government. Hedge Fund A fund that is not normally permitted to be offered to the public as its borrowing, structure or investments, do not comply with relevant requirements. High Yield Bonds/Corporate Bonds A bond that provides a higher income, (or yield) but is rated below investment grade bonds as it has a higher risk of default. Historic Yield The Historic Yield reflects distributions declared over the past twelve months as a percentage of the mid-market unit price of the fund, as at the date shown. Investment Grade Bond A bond which is considered relatively safe and unlikely to default on its debt repayment obligations and has been assigned a high credit rating. Structured Products/Structured Investments A type of product designed to combine the upside in market performance whilst limiting falls and are usually linked to the performance of an index or other underlying asset. 18

20 Important information Risk of investments Past performance is not a guide to the future. The price of shares and any income from them may go down as well as up and you may get back less than you invested. Movements in exchange rates may also affect the value of your investment. Please remember that these investments are typically intended as either medium or long term investments. Disclaimer Whilst every effort has been made to ensure the accuracy of the information contained within this document, we regret that we cannot accept responsibility for any omissions or errors. The information given and opinions expressed are subject to change and should not be interpreted as investment advice. Reference to any particular stock does not constitute a recommendation to buy or sell the stock. The funds are managed to specific risk profiles, based on asset allocations and volatility boundaries that are updated quarterly and provided to us by Distribution Technology. The fund risk profiles are based on our historical fund information and other historical data provided by various third parties. You should not rely on this information in making investment decisions and it does not constitute a recommendation or advice in the selection of a specific investment. The risk profiles do not indicate a promise, forecast or illustration of future risk profiles or performance returns. All data is sourced to unless otherwise stated. This report is directed only at authorised financial advisers and professional investors. Persons who do not have professional experience in matters relating to investments should not rely on the content of this report. A free, English language copy of the Fund s full prospectus, the Key Investor Information Document and Supplementary Information Document, which include all the important information you need to consider before making an investment decision, are available on the website, or you can request copies by calling us on For your protection, calls may be monitored and recorded for training and quality assurance purposes. Issued by Asset Management. Asset Management is the marketing group for Fund Managers Ltd and Portfolio Managers Ltd, who are authorised and regulated by the Financial Conduct Authority of 25 The North Colonnade, Canary Wharf, London E14 5HS For more information

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